Microsoft, Commerce One teaming on B2B

Commerce One is set to detail an agreement next week with the software giant that will allow both to help other companies connect to online marketplaces.

3 January 200212:43 am GMT

Business-to-business software maker Commerce One is set to detail an agreement next week with Microsoft that covers joint software development, sales and marketing for online marketplaces.

The agreement, which was mentioned during Commerce One's first-quarter results conference call late Thursday, also calls for Redmond, Wash.-based Microsoft to loan $25 million to Commerce One to fund the development of its software to support Microsoft.Net--the company's Web services initiative.

Pleasanton, Calif.-based Commerce One, which reported a loss Thursday that met lowered estimates, competes against companies such as Ariba, Oracle and i2 Technologies in making software that helps buyers and suppliers automate their business processes online and connect over the Internet. The company also hosts electronic marketplaces.

Commerce One executives, who said more details about the agreement will be provided during its annual trade show in New Orleans next week, said both companies are working together to find a way to help companies of all sizes to quickly and more easily connect to online marketplaces.

John Ederer, an enterprise software analyst with San Francisco-based Pacific Growth Equities, said in a report Friday that the relationship with Microsoft has the potential to become another "strong" source of sales for Commerce One.

The deal with Microsoft also comes at a time when the business-to-business software market continues to be rocked by earnings warnings and layoffs.

Although online marketplaces have gotten off to a slow start, analysts see the market exploding from $131 billion in 1999 to more than $7.3 trillion by 2004.

In its first quarter, Commerce One posted revenue of $170.3 million, up from $35 million a year ago, and roughly even with analysts' expectations of $170.5 million. Earlier this month, the company joined a string of competitors that also warned of weaker-than-expected quarterly results.